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On Wednesday, February 24, 2016, President Obama signed into law the Trade Facilitation and Trade Enforcement Act of 2015 (H.R. 644) (“TFTE Act”). The wide-ranging law updates U.S. Customs and Border Protection (CBP) operations for the first time in more than a decade and strengthens government enforcement against imports evading duties owed under antidumping and countervailing duty orders (“trade remedy orders”) and imports infringing intellectual property (IP) rights. Other highlights of the law include the elimination of a loophole allowing certain imports produced through child or forced labor, measures to address currency manipulation by other countries, a simplification of the duty drawback process, an increase in the de minimis threshold for low-value shipments, and a special tariff preference program for Nepal.

New CBP Division for Investigating Circumvention of Trade Remedy Orders

Beginning August 23, CBP, through its new Trade Remedy Enforcement Division in the Office of Trade, will be required to investigate interested parties’ duty evasion allegations against imported merchandise subject to trade remedy orders under new mandatory, transparent procedures and deadlines. CBP will have 300 calendar days to issue a determination but may extend the deadline up to 60 calendar days. Upon CBP notification of the ruling, interested parties will have 30 business days to challenge the decision by requesting a de novo review by CBP, which must be completed by the agency within 60 business days. Appeals of the CBP de novo review may be made no later than 30 business days to the U.S. Court of International Trade. If CBP finds that the targeted merchandise evaded trade remedy duties, it will suspend the liquidation of entries of the merchandise and prompt the U.S. Department of Commerce to determine the appropriate trade remedy duty rate for that merchandise.

Domestic industries that have obtained trade remedy orders to combat unfairly priced and/or subsidized imports competing with their products have expressed support for this new enforcement tool. In the past, U.S. producers with trade remedy orders have relied primarily on the U.S. Department of Commerce’s anti-circumvention provisions to fight foreign shippers that evade antidumping/countervailing duties through mislabeling, misclassification and/or third-country circumvention. Despite CBP’s established role to collect import duties and enforce trade remedy orders, CBP has long been viewed as ineffective in fighting duty evasion because of its opaque and discretionary processes. These new enforcement provisions are expected to fix those problems at CBP, providing U.S. producers yet another tool to fight duty evasion.

Improved CBP Enforcement Against Imports Infringing IP Rights

The TFTE Act requires CBP to share certain information with IP rights holders about imports potentially infringing trademarks and copyrights if it will assist in identifying violations. Such information includes unredacted images of the merchandise, packaging and labels. Under the new law, CBP is now authorized to seize circumvention devices—equipment intended to circumvent technological protection measures used to control access to copyrighted material—and to enforce a copyright for which an application for registration is pending. A National Intellectual Property Rights Coordination Center will be established to coordinate investigations of imported goods infringing IP rights and those responsible for producing, smuggling or distributing such merchandise. The center will coordinate training in investigative best practices with other domestic and international law enforcement agencies and will collect, integrate and disseminate information on IP infringement issues with other federal agencies and sources.

Closed Loophole for Imports Produced by Forced Labor

Current U.S. law prohibits the import of “all goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in any foreign country by convict labor or/and forced labor or/and indentured labor under penal sanctions” but allowed a loophole, the “consumptive demand” exception, permitting certain goods produced by such labor to be imported when consumer demand for such goods exceeded the domestic production capacity of those goods. Beginning March 10, 2016, the TFTA Act eliminates this exception. Goods that have historically benefited from the “consumptive demand” exception include cotton, sugarcane, coffee, cattle, rice, fish, cocoa, bricks, garments, carpets, footwear, diamonds, coal and gold. CBP is now expected to implement stiffer enforcement and penalties. U.S. companies and importers should increase due diligence of their supply chain and foreign suppliers to ensure their imported goods and the materials in those goods are not produced by child or forced labor.

Simplified Duty Drawback Process

The TFTA Act also simplifies CBP provisions on duty drawback. Drawback is a mechanism that enables importers to get a refund of 99 percent of duties paid on imported goods when they are exported or destroyed. The time frames for filing drawback claims will be standardized, expanding the time frame for submitting a claim from three years to five years, and the recordkeeping requirements will be modernized. Other key changes include allowing certain substitution drawback determinations to be based on the classification of articles in the same 8-digit HTSUS classification and amending the requirements for claiming drawback under “proof of export” provisions.

Process Addressing Currency Manipulation

The TFTA Act stops short of sanctions on currency manipulation but directs the President to engage countries believed to be manipulating their currency exchange rates. If talks with a country on its exchange rate and economic policies produce no actions or policies to correct the undervaluation or the trade surplus within a year, the TFTA Act allows the United States to take remedial actions that include blocking a country from future free trade agreements and restricting its access to U.S. financing. government contracting, and market opportunities. To begin this process, the U.S. Department of Treasury will be issuing a report within the next six months on the currency exchange rate practices of major U.S. trading partners.

Increased De Minimis Threshold

On March 11, the value of goods that may be imported duty-free by one person in a single day will be increased from $200 to $800.

Tariff Preferences for Certain Imports from Nepal

On March 26, a tariff preference program will go into effect for imports of certain textile and apparel goods from Nepal. The program covers such items as bags, carpets, hats and shawls.

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